Govt. Of Nct Of Delhi vs M/S. Shyam Sunder Goel
2010 Latest Caselaw 3823 Del

        IN THE HIGH COURT OF DELHI AT NEW DELHI

                W.P.(C) No. 6406 of 2008 & CM 12246/2008


        GOVT. OF NCT OF DELHI                      ..... Petitioner
              Through: Mr. S.D. Salwan, Addl. Standing Counsel

                            versus


        M/S. SHYAM SUNDER GOEL                  ..... Respondent
              Through: Mr. Sanjiv Kumar, Advocate.

         CORAM: JUSTICE S. MURALIDHAR

        1. Whether reporters of local paper may be allowed
           to see the judgment?                                   Yes
        2. To be referred to the reporter or not?                 Yes
        3. Whether the judgment should be referred in the digest? Yes

                            ORDER

17.08.2010

1. An interesting question concerning the ineligibility of an elected

Municipal Councillor to hold, after being so elected, a Kerosene Oil

Dealership („KOD‟) licence issued by the Government of National

Capital Territory of Delhi („GNCTD‟) arises for consideration in the

present petition.

2. The Respondent‟s sole proprietor Shri Shyam Sunder Goel, who

was elected Councillor of the Municipal Corporation of Delhi

(„MCD‟) in the year 2002 was, at the time of being so elected,

holding a KOD licence in the name of the proprietary concern of M/s.

Shyam Sunder Goel under the Delhi Kerosene Oil (Export & Prices)

Control Order, 1962 („Control Order‟).

3. The Respondent was issued the above licence in the year 1976

itself. He did not inform the Food & Supplies Department („FSD‟) of

the GNCTD of the fact of his being elected as a Councillor.

According to the Petitioner, the GNCTD, this fact came to the notice

of the FSD sometime in January 2003. On 28th March 2003, the

GNCTD wrote to the MCD seeking specific information in reply to

which, on 30th April 2003, the MCD informed the GNCTD as under:

"Sir,

Please refer to your letter No. AC(E)/F&S/03/814 dated 28.3.2003 on the subject cited above.

In this connection, I am directed to inform you that the desired information is given as under:

                1. Whether a person        The Councillors and
                elected as Corporator      persons shall be
                heads any committee        entitled to receive a
                and Members thereof        daily allowance at
                gets any financial         the rate of one
                benefits from MCD.         hundred and fifty
                                           rupees for each day
                                           on     which     they
                                           attend a meeting or
                                           meetings of the
                                           Corporation or any
                                           Committee thereof
                                           subject     to    the
                                           maximum of rupees
                                           one thousand five
                                           hundred per month.
                2.      Whether     the    „No‟
                Corporator        posts
                involves      financial
                gains.
                3. Whether the person      „No‟
                elected as Corporator
                can continue to be a
                Govt. Licencee against
                the Licence already
                allotted.

4. On the basis of the above response of the MCD, the FSD of the

GNCTD issued to the Respondent a notice on 22nd July 2003 asking

him to show cause in writing as to why his licence should not be

cancelled as he had not informed the FSD of his being elected as the

Councillor of the MCD. In reply to the said show cause notice, the

Respondent replied stating that he was not aware of the fact that an

MCD Councillor could not hold a KOD licence simultaneously. The

Respondent requested the Department to transfer the licence that

stood in the name of the proprietary concern of M/s. Shyam Sunder

Goel in the name of his wife Smt. Usha Goel.

5. Thereafter on 5th November 2004, the following order was passed

by the Assistant Commissioner of the FSD:

"With reference to the Show Cause Notice No. F.AC (E) F&S/03/2298 dt. 22.07.2003 and your subsequent replies/explanations. You are informed that your request for the change in proprietorship of KOD Lic. No. 1730/76 of M/s. Shyam Sunder Goel, 7/14, Trilokpuri, Delhi, in favour of your wife Smt. Usha Goel cannot be acceded to as per departmental policy.

I being the licencing authority and after satisfying myself do hereby order for cancellation of your lic. No. 1730/76 with immediate effect.

This issues with prior approval of CFS Govt. of NCT of Delhi.

(Surender Kumar) Asstt. Commissioner (East)"

6. Aggrieved by the above order, the Respondent filed an appeal

before the Commissioner FSD who, by a detailed order dated 7th

April 2006, dismissed his appeal. Aggrieved by the above order, the

Respondent filed a further appeal under Clause 8 of the Control

Order before the Financial Commissioner („FC‟), Delhi. By the

impugned order dated 10th April 2008, the FC allowed the appeal of

the Respondent, by holding that the Respondent could not be held to

be holding an „office of profit‟ of the GNCTD by virtue of holding a

KOD licence.

7. Aggrieved by the above impugned order dated 10th April 2008

passed by the FC, the present writ petition has been filed by the

GNCTD.

8. It may be noticed that in the meanwhile the term of the Respondent

as MCD Councilor came to an end in the year 2007 itself.

9. It is submitted by Mr. S.D. Salwan, learned counsel appearing for

the Petitioner that the learned FC erred in holding that the holding of

a KOD licence was not an „office of profit‟, while at the same time

observing that the KOD licence granted to the Respondent was his

only source of livelihood and business. Secondly, it is submitted that

the Respondent had accepted the fact that he could not continue to

hold the KOD licence and, therefore, in response to the show cause

notice he only requested that the licence be transferred in his wife‟s

name. The learned FC had not adverted to this aspect at all. The

learned FC has also failed to notice that there is no provision in the

Control Order that permits a transfer of a licence to the wife upon

being elected as a Municipal Councillor. Thirdly, it is submitted that

the mere fact that the term of the Respondent as Municipal

Councillor got over in 2007, would not cure the illegality attached to

his continuing to hold a KOD licence during the period when he was

the Municipal Councillor. Lastly, it is submitted that the learned FC

has not adverted to the clarification issued by the MCD to the

GNCTD on 30th April 2003 clearly stating that a person elected as a

Councillor cannot continue to be a government licencee against a

licence already allotted.

10. It is submitted by Mr. Salwan that the meaning of the term „office

of profit‟ would turn on the wording of the particular statute and the

governing orders. Further the expression „office of profit‟ would

include an office, the holding of which entitles the holder to an

honorarium, remuneration or salary. Relying upon the judgment of

the Supreme Court in Shibu Soren v. Dayanand Sahay (2001) 7

SCC 425, it is submitted that "it is the substance and not the form

which matters and even the quantum or amount of „pecuniary gain‟ is

not relevant". It is submitted that the commission earned by the

Respondent on the sales made in the fair price shop was sufficient to

bring the KOD under the expression „office of profit‟. Reliance is

also placed on the judgment in Shrikant v. Vasantrao (2006) 2 SCC

682, Jaya Bachchan v. Union of India (2006) 5 SCC 266 and

Consumer Education and Research Society v. Union of India

(2009) 9 SCC 648.

11. Learned counsel for the Respondent, on the other hand, submits

that the Respondent having ceased to be a Councillor since 2007, no

prejudice whatsoever can be caused to the MCD if the Respondent

resumes holding the KOD licence. According to him, since 2007

there was no conflict of interest since the Petitioner has, in any event,

not been elected as a Municipal Councillor thereafter. It is submitted

that the holding of a KOD licence might be a disqualification for the

Respondent to continue as a Councillor but not vice-versa. In other

words, except as permitted under the provisions of the Control Order,

a KOD licence cannot be cancelled only because the MCD has

clarified that a Municipal Councillor cannot hold a KOD licence. It

is submitted that the impugned order only refuses permission to the

Respondent for transfer of the KOD licence in the name of his wife

but does not give any specific reason why the Respondent‟s KOD

licence should be cancelled. It is submitted that the judgment of the

Supreme Court in Shrikant clarified that holding a liquor licence or

running a vend did not amount to an „office of profit‟ and, therefore,

would not disqualify an elected member only on that score. Reliance

is placed on the judgments in Kartar Singh Bhadana v. Hari Singh

Nalwa (2001) 4 SCC 661, Dewan Joynal Abedin v. Abdul Wazed

1998 Supp SCC 580 and Ranjeet Singh v. Harmohinder Singh

Pradhan (1999) 4 SCC 517. It is submitted that in so far as there is

no subsisting conflict between holding an elected post and an office

of profit after 2007, there should be no difficulty in directing revival

of the Respondent‟s KOD licence.

12. This Court is unable to accept the explanation of the Respondent

that despite being elected as a Municipal Councillor in 2002, he was

unaware that under Section 9(1)(g) of the DMC Act, a person shall be

disqualified for being chosen as a Councillor if he holds any office of

profit under the Government, i.e. the GNCTD or the Central

Government. It appears that under Section 17(1)(a), one of the

grounds on which an election as Councillor can be set aside is that on

the date of his election a returned candidate was not qualified or was

disqualified to be chosen as a Councillor. This would include any of

the disqualifications under Section 9(1) of the DMC Act.

13. While it is correct that what is being questioned here by the

GNCTD is the order of the learned FC restoring the KOD licence and

not a challenge to the election of the Respondent as a Municipal

Councillor, the learned FC appears to have erred in not appreciating

that the MCD was by its clarification dated 30th April 2003 giving

effect to Section 9(1)(f) of the DMC Act by ordering that once a

person is elected as a Councillor, he cannot continue to be a licencee

of the GNCTD.

14. This is a separate disqualification for holding a KOD licence

contingent upon the licence holder being elected as a Councillor of

the MCD and is traceable to Section 9(1)(g) of the DMC Act. It is

not, as is sought to be contended by the Respondent, that such

disqualification for holding a KOD licence should be found only in

any provision in the Control Order. Certainly there is an implied

condition of the licence that the licence holder will not continue to

function as such if he is otherwise disabled from doing so by virtue

of the office to which he is elected after becoming a licencee.

15. In the considered view of this Court, the reasoning of the learned

FC in the impugned order that the Respondent, by holding a KOD

licence, cannot be held to be holding an office of profit under the

GNCTD is erroneous. However, relatively magnificent may be the

earnings of the Respondent through commission as a KOD licencee,

it would still be an `office of profit‟ under the GNCTD.

16. In Shrikant, the question was whether on account of having a

subsisting contract with a local or other authority, a member of a

Legislative Assembly stood disqualified in terms of Section 9A of the

Representation of the People Act,1951 („RP Act, 1951). It was held

that Section 9A only disqualified persons having subsisting contracts

with the State Government and not with any local or other authority.

It was explained that for the purpose of Section 9A, what was

relevant was whether the candidate has a subsisting contract with the

appropriate government (i.e. the State Government) either for supply

of goods to the Government or by execution of any work undertaken

by the State Government. It is in the above context that it was held

that subsisting contracts with local authorities would not attract the

disqualification under Section 9A of the RP Act, 1951.

17. It appears to this Court that the decision in Shrikant cannot come

to the aid of the Respondent herein for the simple reason that the

statute here in question i.e. the DMC Act, in Section 9 (1)(g), talks of

disqualification even where an „office of profit‟ is held under the

GNCTD or the Central Government and not only with the MCD. As

explained by the Supreme Court in Shibu Soren, for determining

whether a person can be said to be holding an „office of profit‟ under

the Government, each case has to be judged in light of the relevant

provisions of the statute and on its own peculiar facts. It was

explained that whenever such question arises, a realistic approach

would have to be adopted having regard to the facts and

circumstances of each case and the relevant statutory provisions. It

was explained that a ban on the candidature must have a substantial

and reasonable nexus with the object sought to be achieved, namely

elimination or in any event reduction of possibility of misuse of the

position which the legislator concerned holds or has held at the

relevant time. In the said case, it was further explained in para 26 as

under:

"The expression "office of profit" has not been defined either in the Constitution or in the Representation of People Act. In common parlance, the expression 'profit' connotes an idea of some pecuniary gain. If there is really some gain, its label - 'honorarium' - 'remuneration' - 'salary' is not material - it is the substance and not he form which matters and even the quantum or amount of "pecuniary gain" is not relevant

- what needs to be found out is whether the amount of money receivable by the concerned person in connection with the office he holds, gives to him some

"pecuniary gain", other than an 'compensation' to defray his out of pocket expenses, which may have the possibility to bring that person under the influence of the executive, which is conferring that benefit on him."

18. In the above case, it was held that the drawing of honorarium and

allowances by Shri Shibu Soren for attending meetings as Chairman

of the Interim Jharkhand Area Autonomous Council would attract the

disqualification for the purposes of Article 191(1)(a) of the

Constitution of India.

19. The above law was reiterated in Jaya Bachchan where in para 6

it was explained as under:

"An office of profit is an office which is capable of yielding a profit or pecuniary gain. Holding an office under the Central or State Government, to which some pay, salary, emolument, remuneration or non- compensatory allowance is attached, is 'holding an office of profit'. The question whether a person holds an office of profit is required to be interpreted in a realistic manner. Nature of the payment must be considered as a matter of substance rather than of form. Nomenclature is not important. In fact, mere use of the word 'honorarium' cannot take the payment out of the purview of profit, if there is pecuniary gain for the recipient. Payment of honorarium, in addition to daily allowances in the nature of compensatory allowances, rent free accommodation and chauffeur driven car at State expense, are clearly in the nature of remuneration and a source of pecuniary gain and hence constitute profit. For deciding the question as to whether one is holding an office of profit or not, what is relevant is

whether the office is capable of yielding a profit or pecuniary gain and not whether the person actually obtained a monetary gain. If the "pecuniary gain" is "receivable" in connection with the office then it becomes an office of profit, irrespective of whether such pecuniary gain is actually received or not."

20. Most recently, in Consumer Education and Research Society it

was explained in para 77 as under:

"In this case, what kind of office would amount to an 'office of profit' under the Government and whether such an office of profit is to be exempted is a matter to be considered by the Parliament. The key concern that certain offices or places held by a MP may be either incompatible with his/her duty as an elected representative of the people or affect his/her independence and thus weaken his/her loyalty to his/her constituency and, therefore, should disqualify the holder thereof, is a matter to be addressed by the Parliament. It is also not possible to classify and include the offices exempted from the said disqualification in a generic sense. While making the legislation exempting any office, the question whether such office is incompatible with his/her position as a MP and whether his/her independence would be compromised and whether his/her loyalty to his/her constituency will be affected, should no doubt be kept in mind to safeguard the independence of the Members of the legislature and to ensure that they are free from any kind of undue influence from the executive."

21. Keeping in view the background of the law explained by the

Supreme Court in the above decisions, the decision of the MCD not

to permit an elected Councillor to continue to be a KOD licencee

under the GNCTD cannot be faulted. The said decision of the MCD

has not been challenged by the Respondent who, having served as a

Municipal Councillor for the full term, could in any event not now

turn around and challenge the decision. That the Respondent was not

aware of the above decision is no excuse. It does not help him to seek

revival of his KOD licence notwithstanding that he has completed his

complete term as a Municipal Councillor.

22. There is also merit in the contention that the Respondent was also

aware that his continuing to hold the KOD licence, while being a

Municipal Councilor, was legally untenable and that is why he

responded to the show cause notice by seeking transfer of the KOD

licence in favour of his wife. Although the Respondent appears to

have given up the said ground in these proceedings, it was certainly

one of the points urged when the order was passed by the

Commissioner, FSD on 7th April 2006. As rightly pointed out in the

said order, there is no provision in the Control Order or even the

instructions or guidelines issued thereunder to effect a change in the

constitution of a licence holder even when the original licencee is

alive. The departmental guidelines issued on 17th June 2002 made it

clear that change in constitution will be allowed only in case of death

of licencee, and consequent transfer of the licence to his successor,

legal heir or natural heir. Therefore, the Petitioner was justified in

rejecting the prayer of the Respondent for transfer of the KOD

licence in the name of his wife upon his being elected as a Municipal

Councillor.

23. In light of the above legal position, there is no question of

permitting the Respondent to get his KOD licence revived upon the

completion of his tenure as a Municipal Councillor. The KOD

licence could not be held by him after he got elected as a Councillor.

It was incumbent upon him to have surrendered it immediately upon

being elected as a Councillor.

24. For the aforementioned reasons, the impugned order of the

learned FC dated 10th April 2008 is set aside. The writ petition is

allowed but, in the circumstances, with no order as to costs.

Application also stands dismissed.

S. MURALIDHAR, J AUGUST 17, 2010 dn